Tesla is only the beginning of Spotify's plan to stream music to your car
- Spotify released its first earnings report as a public company on Wednesday.
- Financially, the quarter was a disappointment for investors, who had expected a much smaller loss.
- Active users and premium subscribers, however, are growing, something the company said it wants to continue through partnerships with automakers.
- Follow Spotify's stock price in real-time here.
Spotify's first quarter might have disappointed financially, but the Swedish streaming giant is adding users at a rapid clip. The company reported 75 million premium subscribers for the period, up from 71 million in the fourth quarter and 52 million a year-ago.
To avoid plateauing, the company is exploring more ways to get you listening in your car that don't involve bluetooth or plugging your phone into an auxiliary headphone cable.
"As it come to autos, we really have three strategies," Spotify founder and CEO Daniel Ek told analysts on a conference call following the release of its quarterly results.
The first strategy is what you might expect: traditional ways of connecting your phone to listen to Spotify, specifically bluetooth. But not only is Bluetooth an aging and insecure technology, these are the same ways you could listen to any streaming service from a device. Either way, Ek says there are "tens of millions" of people already streaming Spotify in their car.
"The second part of it is in-dash partnerships like the one we did with Cadillac," said Ek. "Primarily, those are where there's an Internet connection that comes with the car. Tesla is another examples of those that we're doing. I'm seeing more and more of those deals coming through as new cars are starting to roll out."
It's not just a way for Spotify to grow premium memberships, either. Automakers could get a huge boost from selling subscription services through their in-car infotainment systems, like Tesla's 17-inch screen. Morgan Stanley theorized earlier this week that General Motors, for example, could add $1 billion to its EBITDA for every $1 it brings in from a customer subscription.
"And thirdly, it's the combination where it's through Android Auto and Apple CarPlay where you use your existing smartphone as the display on the car dash, and the data from the phone access the modem to reach the music," Ek said. "Those are the three modes we're going after the car opportunity, and we're seeing some good growth in all three."
Shares of Spotify are down 6.2% since they began trading on April 3.